Delaware Severance — DE Mini-WARN, 6.60% Top Rate, PFML 2026

Delaware WARN: what applies#

Delaware has a state-level mini-WARN — the Delaware Worker Adjustment and Retraining Notification Act, 19 Del. C. ch. 19 §§ 1901–1911. Section 1903 applies the statute to any business enterprise that employs 100 or more employees (excluding part-time employees) or 100 or more employees working in the aggregate at least 2,000 hours per week. The statute is triggered by an employment loss of 50 or more employees who make up 33% of the workforce at the site, or 500 or more employees regardless of percentage, during any 30-day period. Section 1904 requires 60 days advance written notice to affected employees, the Delaware Department of Labor Division of Employment and Training, AND the Delaware Workforce Development Board — Delaware uniquely requires notice to the state workforce development board in addition to the standard federal-WARN trio. Liability under § 1909 is back pay at the higher of the employee's average regular rate of compensation during the last 3 years or the final rate, plus the value of benefits, capped at 60 days or ½ the days the employee was employed (whichever is smaller). Section 1910 sets a civil penalty of $1,000 per day of violation OR $100 per day per dislocated worker, whichever is greater — notably higher than federal WARN's $500/day civil penalty.

How severance is taxed in Delaware#

Delaware income tax is graduated (seven brackets, top marginal 6.60% on income above $60,000, unchanged since 2014) and the state does NOT publish a separate flat supplemental withholding rate. Section 14 of the Delaware Division of Revenue's Employer's Guide for Withholding Regulations and Employer's Duties (Supplemental Wage Payments Including Tips) directs employers to use an annualization method: annualize the employee's regular wages and compute the tax on this amount; annualize the regular wages and add the supplemental wage to this amount, computing tax on the combined amount; subtract the difference in the tax amounts — the remainder is the amount to be withheld from the supplemental wage. The Employer's Guide's Section 14 explicitly applies to 'supplemental wages, such as bonuses, commissions, overtime, back pay (including retroactive wage increase), or reimbursements for non-deductible moving expenses' and Section 10(a) lists 'salaries; vacation allowances, bonuses, commissions, and earned severance pay' as wages subject to withholding. For severance-recipient earners whose annualized compensation exceeds $60,000, the annualization method effectively withholds at the 6.60% top marginal rate. Plus the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 for the year) and FICA.

Calculate your situation#

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FAQ#

Does Delaware require severance pay?

No Delaware statute generally requires private employers to pay severance. The Delaware Worker Adjustment and Retraining Notification Act (19 Del. C. ch. 19) requires 60 days advance notice (or back pay for missed days under § 1909) at employers of 100+ for covered mass layoffs — but it mandates notice, not severance beyond the pay-in-lieu damages for short notice. Delaware has no Maine-style or New Jersey-style statutory severance mandate. Severance itself is employer-discretionary in Delaware unless your employment agreement, handbook, or collective bargaining agreement makes it mandatory.

How is severance taxed in Delaware?

Delaware does not publish a separate flat supplemental withholding rate. Section 14 of the Delaware Division of Revenue's Employer's Guide for Withholding directs employers to use an ANNUALIZATION method for supplemental wages — including 'bonuses, commissions, overtime, back pay (including retroactive wage increase), or reimbursements for non-deductible moving expenses' (Section 14) and 'earned severance pay' (Section 10(a)). The four-step procedure: (1) annualize the regular wages and compute the tax on this amount; (2) annualize the regular wages and add the supplemental wage to this amount, computing tax on the combined amount; (3) subtract the difference in the tax amounts; (4) withhold the remainder from the supplemental check. Delaware's 2026 brackets (unchanged since 2014): 0% up to $2,000; 2.20% to $5,000; 3.90% to $10,000; 4.80% to $20,000; 5.20% to $25,000; 5.55% to $60,000; 6.60% above $60,000 (top marginal). For severance-recipient earners whose annualized compensation exceeds $60,000, the annualization method effectively withholds at the 6.60% top rate. Plus the federal 22% supplemental rate (37% on cumulative amounts above $1,000,000 for the year) and FICA (Social Security 6.2% to the wage base, Medicare 1.45% on all wages, plus 0.9% additional Medicare on wages above $200,000 single / $250,000 MFJ). State tax is reconciled on your Delaware Form 200-01.

Does Delaware have a mini-WARN statute?

Yes. The Delaware Worker Adjustment and Retraining Notification Act, 19 Del. C. ch. 19 §§ 1901–1911, is Delaware's state-level mini-WARN. Section 1903 applies the Act to any business enterprise that employs 100 or more employees (excluding part-time employees) or 100 or more employees working in the aggregate at least 2,000 hours per week. The Act is triggered by an employment loss of 50 or more employees who make up 33% of the workforce at the site, or 500 or more employees regardless of percentage, during any 30-day period — these thresholds mirror federal WARN. Section 1904 requires 60 days advance written notice to affected employees, the Delaware Department of Labor Division of Employment and Training, AND the Delaware Workforce Development Board. The DWDB notice is the distinguishing feature — Delaware uniquely requires notice to the workforce development board in addition to the standard federal-WARN trio. Liability under § 1909 is back pay at the higher of the employee's average regular rate of compensation during the last 3 years or the final rate of compensation, plus the value of benefits to which the employee would have been entitled, capped at 60 days OR ½ the days the employee was employed by the employer, whichever is smaller. Section 1910 sets a CIVIL PENALTY of $1,000 per day of violation OR $100 per day per dislocated worker, whichever is greater — notably higher than federal WARN's $500/day civil penalty payable to the local government.

Does OWBPA apply in Delaware?

Yes. OWBPA is federal (29 U.S.C. § 626(f)) and applies in all states. If you are age 40 or older and your Delaware employer asks you to sign a waiver of age-discrimination claims under the ADEA in your severance agreement, the waiver is enforceable only if you receive at least 21 days to consider the agreement (45 days for group exits — a "reduction in force" or "exit incentive program"), and 7 days after signing to revoke. Group exits additionally require disclosure of the ages and job titles of all selected and non-selected employees in the decisional unit. The Delaware Discrimination in Employment Act (19 Del. C. ch. 7) separately prohibits age discrimination by employers with 4 or more employees — a lower threshold than the federal ADEA's 20-employee minimum, so smaller Delaware employers are still covered by state law. A release of state-law age claims under chapter 7 does not require OWBPA-compliant 21/45/7 procedures, but the federal ADEA release portion still does — the safer practice is to insist on the OWBPA timeline regardless.

Can I collect Delaware unemployment while receiving severance?

It generally depends on how the severance is structured. The Delaware Department of Labor's Unemployment Insurance Division typically treats severance based on allocation: severance paid as a lump sum that is NOT designated for a specific notice period typically does not delay UI benefits, while severance designated as 'wages in lieu of notice' or paid as salary continuation tied to a specific period is treated as wages and delays benefits dollar-for-dollar during that period. Vacation, sick, and holiday pay paid at separation may also delay UI under DOL rules. Practical takeaways: (a) file your Delaware UI claim with the DOL UI Division on or shortly after your last day worked at ui.delaware.gov to establish your benefit year; (b) fully disclose the severance amount, structure, and any employer designation when you apply and on weekly certifications — failure to report severance is fraud; (c) confirm the current Delaware UI maximum weekly benefit amount with the DOL UI Division before relying on net-of-benefits figures.

Are non-competes enforceable in Delaware after a layoff?

Often yes, but Delaware courts have grown more skeptical of overbroad covenants. Delaware non-compete law is primarily common-law and applies the standard reasonableness test: a post-employment covenant must be reasonable in time, scope of restricted activities, and geographic area, must protect a legitimate business interest (trade secrets, confidential information, substantial customer relationships, goodwill), and must not impose undue hardship on the employee or harm the public. Three notable Delaware Court of Chancery decisions have signaled judicial skepticism of overbroad non-competes: (1) Delaware Solid Waste Authority v. Eastern Shore Environmental, 2002 WL 537691 (Del. Ch. 2002); (2) Kodiak Building Partners, LLC v. Adams, 2022 WL 5240507 (Del. Ch. Oct. 6, 2022), where Vice Chancellor Will declined to blue-pencil an overbroad non-compete and instead refused to enforce it; and (3) Sunder Energy, LLC v. Jackson, 2023 WL 8166517 (Del. Ch. Nov. 22, 2023), declining enforcement of a non-compete on similar grounds. Practical takeaway: in Delaware, the non-compete release clause in your severance offer can have real value, but Delaware courts may be more willing than other states to strike down rather than rewrite unreasonable covenants — meaning a poorly-drafted non-compete in your existing employment agreement might already be unenforceable. Have an attorney review duration, geography, and scope before signing.

How does Delaware Paid Leave (Healthy Delaware Families Act) interact with my severance?

Delaware Paid Family and Medical Leave — created by the Healthy Delaware Families Act (signed May 10, 2022, codified at 19 Del. C. ch. 37) and administered by the Delaware Department of Labor Paid Leave Division — is LIVE in 2026. Per the DE DOL Paid Leave Division: payroll deductions began January 1, 2025; employees began submitting claim applications on January 1, 2026 (benefits live). Coverage: businesses with 10+ employees must participate; businesses with 9 or fewer are exempt. Funding: less than 1% of an employee's weekly salary, with employers able to require employees to contribute up to half the cost. Benefits: up to 80% of wages capped at $900/week, with weeks of leave allocated as parental leave (up to 12 weeks per year), serious health condition (up to 6 weeks every 24 months), family caregiving (up to 6 weeks every 24 months), and qualifying military family events (up to 6 weeks every 24 months); maximum combined leave is 12 weeks annually. Delaware Paid Leave payroll deductions DO NOT apply to severance paid after the employee's last day of work. If you experience a qualifying Paid Leave event (e.g., your own serious health condition, baby bonding, family caregiving) during a salary-continuation severance period, you can generally apply for Delaware Paid Leave benefits, though benefits and continuing wages may be coordinated. Confirm current eligibility and benefit amounts at labor.delaware.gov/delaware-paid-leave/.